Planned Obsolescence - Is it a Right Strategy for any Brand?

Posted in Marketing & Strategy Articles, Total Reads: 3188
, Published on 07 April 2013

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We all know about Godrej’s steel cupboards, which were present in almost everyone’s homes. The cupboards which refused to break down and were passed from one generation to the other. Well, they have vanished like those old times.

Wikipedia defines ‘Planned Obsolescence’ as: ‘’a policy of planning or designing a product with limited useful life, so it will become obsolete, i.e., unfashionable or no longer functional after a certain period of time.’’

Modern consumer often faces the dilemma of keeping up with trends or using the product to its complete lifecycle. Very often, the life of the product is just equal to its warranty period, after which the consumer is forced to restart the buying process and replace it. Other times, he finds himself at crossroads, when the product he has is functionally competent but aesthetically obsolete.

The reason why he often finds himself in this difficult situation is because of ‘planned obsolescence’.

The definition stated above seems like a great conversation starter for conspiracy theorists or anti-consumerism activist groups. On the face of it, it looks like a clever ploy of profiteering companies to further exploit innocuous and unassuming customers by using them as pawns in their strategy towards amass greater wealth. But, let us look at few arguments before reaching a conclusion.

Are Producers the real conspirators or just scapegoats?

Though technologically possible, it is economically unviable to manufacture products which last very long. Consumers or society at large desire products which last for many years, in contrast to producers who want to maximise their profits. By producing products that last for an extended time period, they will simply be jeopardizing the economic lives of their ventures. Hence, they produce goods which develop equilibrium in the market; the consumers find sufficient utility in them while the producers also earn enough profits.

For firms in the Fashion or Apparels industry, this phenomenon is just unavoidable. Trends and fads are to be incorporated in the product lines which make present products obsolete in the nest season simply inevitable.

Exceptions:

Companies like Phillips have always taken initiatives to enhance the durability of their products. Their innovation of energy efficient CFL in the lighting market lead to the ouster of halogen bulbs and up to 30% reduction in electricity consumption, apart from longer life.

Amaron, the car battery manufacturer which claims that its batteries work for the longest time as compared to others. This claim is sharply expressed in its advertising campaigns with slogans like- ‘last long, really long’.

Luxury brands like Rolls Royce, Rolex, etc. swear by the quality of their products and can’t afford them to get obsolete quickly. Instead, they form the benchmarks in product design, quality and manufacturing which are to be adhered to for many years to come.

Competition is the force that drives them towards ‘planning’ their products’ obsolescence.

Competition forces producers to continuously bring out new products or upgrade existing ones to outperform each other in their quest for attaining market leadership. Thus, they have to think one step ahead of themselves and two steps ahead of their rivals. By not doing this, they are just like sitting ducks, waiting to be attacked by the hunter (read competitor).

Thus, when Samsung launches Galaxy S III to take on Apple’s IPhone 5, it has to start working on Galaxy S IV right away, even before gauging the market response. By not doing it, it gives Apple the chance to circumvent it with the next IPhone.

This fast world has forced to companies to always be on their toes. Neither can they afford to be lax in competing with their rivals, nor leaving the customer unsatisfied. If they don’t do it, the competitor will definitely do it.

On the positive side, these competitive pressures often result in innovation and efficient redesigning of business practices. With an aim to catch the competition, firms look ‘out of the box’ for solutions.

Business Process Innovations:

To reduce the errors in production process and check its costs, Motorola invented the Six Sigma process, which enabled it to win the Malcolm Balridge National Quality Award given by the United States Congress in 1988. Popularized by Toyota, Kaizen is the process of continuous improvement of business processes by the formation of quality groups. Google offers benefits like free gourmet chefs, giant lap pools, ping-pong and foosball tables, etc. to extract the most from its employees and secure loyalty. Some other common changes in today’s organisations are: shorter production cycles, flatter organization structures and beefed up R & D budgets.

Product Innovations:

Seeing an opportunity between the phone and tablet segment, Samsung Electronics created a new category of ‘Phablets’ or ‘phone + tablets’ with launch Galaxy Note, a 5 inch Smartphone. Even after being panned by critics initially, it went out to become such a success, that its next model, Galaxy Note II was able to sell more than 2 million units in its first month of launch.

Remember, there are always two sides to a coin.

Take a look at the Apple IPhone 5. What is the difference between IPhone 4S and IPhone 5? Half an inch! Or for that matter between IPad 3 and IPad 4? Retina display. That’s it.

Agreed that Apple is the leader in a market with cut-throat competition and companies like Samsung Electronics inching closer to its throne, but these incremental improvements just cannot be termed as ‘’innovations’’ or strategies to keep competitors at bay. These are mere tactics to mislead the consumers into thinking that the product they possess has become outdates and lost its ability to offer utility to them. Rather, through heavy advertising and much hyped press conferences, consumers are brainwashed into believing that by not upgrading to the new version, they would be left behind, as the rest of the world moves on to the ‘Next Big Thing’.

In the automobile sector this phenomenon goes by the name of a ‘facelift’. Some tweaks in the headlamps, new bumpers or use of a little chrome leads to the rebranding of the old car as a ‘new and improved’ one. Car buyers are made to believe that by incorporating the changes, the car has become a new one which justifies the rise in price, whereas from inside it is the old car with a few minor cosmetic changes.

Impacts on the Environment

The environmental impacts of such practices can easily be inferred:

More utilization of resources than is required by the society leading to faster resource depletion.

Rising levels of pollution which adversely affect the climate and crop cycles.

Increased wastage causing ecological imbalances and over use of energy.

Conclusion

We can conclude that planned obsolescence is strategy followed by manufactures to shorten consumption cycles and augment consumer spending. This is a zero sum game, where one party wins (producers) at the expense of the other (consumers). Consumers are mislead into believing what they are consuming is not worth consumption and must be replaced by the new version, whereas it is nothing but a clever ploy on the part of marketers to fatten up their bottom lines.

But, this phenomenon is not present in all the sectors. Sectors which involve design, aesthetics and fashion are the ones impacted by it. This is because these thrive on the consumer interests based on psychological needs and trends in the world and are extremely difficult to predict. As a result, instead of relying on consumers to identify their needs, the manufacturers themselves provide the consumers with new needs which can be fulfilled by their products. Along with the presence of competitors, planned obsolescence becomes a more important strategy for survival than for profits or growth.

On the flipside, in sectors where functionality matters more than aesthetics or fashion, the ideologies of durability are followed. As the consumer is more interested in the functioning of the product than its appearance, the manufacturers have no choice but to provide long lasting and well functioning products. The competition is played out on the basis of offering maximum utility to the customer at the lowest price.

This article has been authored by Vatsal Sethi from Keshav Mahavidyalaya.